Cigarette tax: Center imposes excise duty, effective from February 1

The central government has imposed excise duty on cigarettes. These charges will be levied in the range of Rs 2,050-8,500 per thousand sticks depending on the length of the products and will be applicable from February 1. The Finance Ministry said in an order late on Wednesday night.

The move could raise cigarette prices for the estimated 100 million smokers in the world’s most populous country.

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In December, the Center approved a new law – the Central Excise (Amendment) Bill 2025 – which replaces the temporary levy on cigarettes and tobacco products.

Wednesday’s statement revealed that excise duty will be imposed on cigarettes in addition to the existing 40% goods and services tax.

Total taxes on cigarettes in India are currently around 53% of retail prices, well below the World Health Organization’s benchmark of 75% aimed at discouraging consumption. It also includes a 28% goods and services tax and an additional value-based levy depending on the size of the cigarette.

The higher duty may impact the sales numbers of cigarette makers like ITC and Godfrey Phillips India.